Selling to China via eCommerce

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What is your China strategy?

  • Online vs offline opportunities, which should come first?
    • Is your competitors there?
    • Is there a demand at that price?
  • Partner or your own?
  • Who is your consumer
    • Where, how old?
    • Different regions, different characteristics in China
  • Resources available internally?
    • Are you ready to invest time in it?
  • Importance of insights / data

 

China growth is slowing down but still it grew 6% last year

 

Chinese consumer

  • Government policies to promote domestic consumption
    • Domestic consumption is the main source of growth
  • Ratio online – total retail overtook UK with 23%
  • Large population with increasing spending power
  • Becoming more sophisticated – needs and desires changing
  • 2015 high and upper middle disposable income 10%
    • 2030 it will increase to 35%
    • People are moving up the scale of disposable income

 

Routes to market

  • Retail
    • Daigou: Chinese tourists purchasing from abroad and selling back in China
    • Tourists: Chinese tourists spend considerably more than most other tourists
  • Distributor
    • Hard to find a distributor but easy afterwards
    • You don’t control the sales process or how your brand is presented etc
  • Cross border e-commerce platforms
    • .com website
      • Historically Chinese people are emarketplace focused
      • People who have been successful on their .com sales, have bit of brand awareness
      • Google is nothing in Chinese, SEO does not matter in China
      • Native Chinese platforms are much better
    • Chinese marketplace + 3rd party or trade partner

 

Routes to market

  • General import
    • Product registration
    • Import permit
    • General import
    • Distribution retailing
    • Consumers
  • Cross borders ecommerce
    • Customers order online
    • Ecommerce / postal clearance
    • Consumers

 

Books or other products that might need to go through content checks, might not be suitable for ecommerce.

 

VAT in China was 16% and now going down to 13%

 

Huge distrust in locally manufactured brands and goods in China, especially in mother and kid products. High quality and healthy perception.

 

Diversification

  • Intense competition
  • Consumers are using a greater variety of ecommerce platforms
  • 1 app users were 48% in 2016 , then it is 29% in 2017
  • 5 app users were 5% but now 14%
  • Don’t use different distributors for different ecommerce platforms – price cuts can be problematic
  • Ecommerce app users
    • Taobao most popular
    • Pinduoduo

 

  • Cross border ecommerce market (B2C) competitive landscape
    • Tmaill
    • Kaola
    • Jd global
    • VIP
    • Amazon

 

Website performance

  • Range of payment options
    • Alipay, wechat
  • Great firewall of china
    • Not only censorship but slows downs everything from outside of the country
    • Good website performance is important
  • Fast delivery to mainland china

 

Top influencers when chinese consumers buying through cross border online

  • 50% Word of mouth from friends
  • 32% social media comments
  • 25% seo search results . that is baidu

 

Is it for me?

  • There are many routes to market
  • Doing it alone is expensive
  • Being British / European & Foreign is not enough
  • It can be a relatively easier route to market, but is still a complex and time consuming process
  • A key challenge is that many chinese buyers are risk averse and brand conscious
  • Models are shifting – e-marketplaces introducing e-taling into their models, social commerce is on the rise
  • Building brand awareness in an increasingly crowded market takes, patience, ingenuity, deep pockets and often luck
  • But… if you have the right product or brand, there can be a real opportunity

 

You should register your trademark in China before pitching it.

It will cost you about 1000 GBP

It can take a long time 18 months. But you are OK to trade if your application is in.

 

https://www.regroup-media.co.uk/

 

China digital landscape

Market size

  • Biggest online market in the world – 800M online, 1/5 of the World’s internet users
  • 80% internet is through mobile in CN
  • 50% mobile in UK and US
  • China now counts as 40% of all online transactions

 

Digital channels

  • No google, ebay, facebook, Twitter, paypal
  • Yes Linkedin and Amazon

 

English language

  • Fluent English 1%

 

Seasonality

  • Digital trends are very seasonal
  • Paid advertising can exploit these peaks via special promotions

 

Channels

  • Web presence
    • More for brand awareness than selling
    • Localised web presence does reaffirm a desire to engage with a China audience
    • Partly protection, partly reach
    • Host the site locally in China to make it open faster, an ICP licence is required or use a CDN
    • What works design-wise in the West doesn’t necessarily work in China
  • Search engine landscape
    • Baidu dominates the landscape
      • Little less sophisticated than Google
    • Organic and paid similar to Google
  • Social
    • Weibo – shorter posts, facebook and twitter like
      • Sophisticated advertising like FB
      • Younger audience
      • Cheaper cost per ad
      • Brand awareness
    • Wechat
      • Many things, 1 billion+ users,
      • 5st biggest social media channel in the world
      • Biggest in China
      • Way more than whatsapp
      • More like an ecosystem
        • Calls, messaging, ecommerce, payment gateway, games
        • Social media, bookings, pictures (like IG)
      • 900M users are based in CN, 100M are outside of CN
      • 86% users between 18-36
      • High skewed on urban, professional
      • Highly engaged
        • 50% of users use for 90 mins
        • 30% of all time spent on mobile in CN is on Wechat
        • Lengthier posts, more like blog posts
      • Mini programs   
        • 200M people use them
        • Smaller and more streamlined than traditional apps
        • No download for individuals
        • Load faster, hosted in Tencent servers
        • 20% of the cost for 80% of functionality
        • Ecommerce, flash sales,
      • Wechat ads
      • Influencer marketing (KOL)
        • In later stages, where the brand is already established
      • Wechat pay
        • 600M users. Biggest along with Alipay which these 2 dominate
        • Wechat 0.6%, banks get 1.5% to get money to UK

Summary

  • Wechat is a good place to start, for proof of concept

 

http://avenue51.com/

 

  • Cross border model
    • When a shopper sells directly to CN from UK
  • Distributor model
    • Spike in orders
    • Visibility issues
    • Distributors dont tell you who they are selling, how they are selling